• The Wall Street Journal, All Things Digital, Tech Crunch, Thursday, April 17, 2008 11:32 AM

The Wall Street Journal says that Yahoo is moving closer to outsourcing its search advertising to Google, after the first week of a two-week Google search test yielded positive results for the Sunnyvale, Calif. Web giant. Of course, that's according to "people familiar with the matter", who various writers in the blogosphere say are probably Yahoo execs simply trying to add more bite to their bluff. Does anybody really think a Yahoo-Google search partnership would pass a regulatory sniff test?

The Journal says the two are exploring ways to address those concerns, such as "limiting the partnership to specific groups of search queries or regions." All Thing Digital's Kara Swisher wants to know (and so do we) what, exactly, that means, and whether it would make any serious difference to regulators. "There is simply no way (a Google-Yahoo partnership) will be allowed by regulators nor should it," she says. "It is bad for advertisers, it is bad for consumers, it is bad for innovation, no matter how well-intentioned Google is.

This is all about bating Microsoft into a higher offer, and TechCrunch's Michael Arrington says Yahoo has now put all its chips on the table. "Meanwhile, Google is the clear winner from this whole episode," he says. "They either get a huge win (Yahoo search) or a slightly smaller win (their biggest competitor acquired and mired in merger logistics for a year or more)."

Read the whole story at The Wall Street Journal, All Things Digital, Tech Crunch »